20 tips to calculate startup costs

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After working on a cool business idea, the main question arises, “How much is it gonna cost?” Answering this question can be very tricky. Expenses and requirements of a business vary with their genre. Some businesses can be started on a small budget, while it’s not the same for all. It is very important to know how much money is required to open and operate a business to keep it running smoothly. Forecasting startup costs is one of the most important pre-startup tasks that can give an idea to the owner about its future. For example, when facebook started, Zuckerberg spent $3000 on a monthly basis for its hosting, and after 4 years, this expense rose to $10 million. As a startup grows, it’s expenses also grow, that make the forecasting of costs a necessary aspect for the business.

TIps to calculate the startup cost

Tips to calculate the startup cost

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Here are some tips

  1. Every business requires a working space where team members can work and collaborate. Think about the money that you need to pay for the rent or the renovation of the space. Research and forecast your future costs.
  2. One should consider the production costs in case of a product business.
  3. Presence of technology makes the business more productive. Compute the expense of computer, telephones and copiers that you might need for your startup.
  4. Figure out the salaries with the benefits that you’ll offer to your employees.
  5. E-commerce businesses always have to ship the products to their customers, so if yours is an e-commerce startup, it is essential to add packaging and shipping costs.
  6. Insurance always provide enhanced the safety to products. Keep an account of insurance against property damage, business interruption, for better budgeting.
  7. Don’t forget to add overtime pay and payroll related taxes to your budget.
  8. Marketing and advertisements are necessary for the growth of a business. Calculate the required expense for advertising your startup to the right set of people.
  9. While calculating the costs, make sure you count utilities and other expenses, the most overlooked charges.
  10. Attorney’s advices are necessary to stay abreast of the legal issues of the business. Take care of the attorney’s and consultant’s costs.
  11. Consider the expenses for getting permits and licenses related to your business.
  12. At present, no business can run without an internet connection. Add the estimated cost of monthly internet charge and other software applications.
  13. If the owner took some loan for fluid financial stream, then he should also include the eligible interest on his budget.
  14. Separate recurring costs and one-time costs. This helps in establishing the budget after the launch of your startup.
  15. Every business needs a website and a dedicated maintenance service for it. Interpret such costs and add them to your list.
  16. Identify the expenditure in business cards and other stationeries, like notepads and pens, etc.
  17. Products based businesses need raw material for the production of their goods. Including the amount of raw materials and their transportation charges can also be beneficial in forecasting your startup costs.
  18. If you opt to accept credit cards for your business, then do take account of their fees. They can be expensive.
  19. Recruitment costs are a major concern for employers. One should not underestimate the recruitment cost, and should consider while calculating total costs.
  20. Often, while starting a business, owners forget to take care of surety bonds until they realize it’s significance in a midway of the licensing process. Make sure to fill out surety bonds and add up their fees too.
Cost elements

Cost elements

Starting a business is a challenge in itself. It’s not the launching of a startup that’s costly but it’s the operational expenses, that takes a toll on the owner. The beginning process of a startup can be both time consuming and overwhelming. It requires great amount of hard work and research. While robust efforts are required for business success, one also needs capital strength to get started, making the determination of startup cost an essential endeavour.


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